Ok, thanks for the source. Let's use some different sentences to examine the principle.
The original sentence:
The use of GMAT books is based on the assumption that studying produces hormones in an individual that, in turn, create unconscious physical responses. (Yes, I know the meaning of the sentence is kind of amusing - I'm trying to match some singular and plural stuff in the original sentence!)
The "in turn" bit is just a little modifier tossed in to break up the sentence a bit and confuse you. Ignore it!
The use of GMAT books is based on the assumption that studying produces hormones in an individual that create unconscious physical responses.
Core:
The use <of X> is based on the assumption that studying produces <Y>.
Modifier Y:
hormones <in A> that create <Z> responses
No problems with core or modifier so far. I assume that the people who chose C thought there was something wrong with A, so let me know what you thought was wrong.
Now, adapting our new sentence for choice C:
The use of GMAT books is based on the assumption that studying produces hormones in an individual creating, in turn, unconscious physical responses.
Core:
The use <of X> is based on the assumption that studying produces <Y>.
Modifier Y:
hormones <in an individual creating responses?>
Still no problem in the core. That modifier, though... that's messy. There's no comma between "individual" and "creating" and that's a big problem. Try this phrase:
"stress in an individual studying hard for the GMAT"
What does that "studying hard for the GMAT" refer to? In this sentence, it's modifying the individual - and that makes sense.
But what about our example above? It's ambiguous here - "individual" is a candidate for the noun, because an individual can create unconscious responses... and so can the hormones... and, hey, so can studying! Which is it? Ambiguity = bad.
Note that there is no ambiguity in A, because the conjugated verb "create" can match only with a plural subject, so it must match with the plural "hormones." Now we know that it's definitely the hormones creating the responses.
